Strategic Management Basic

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Introduction to Strategic Management
Course Objectives
• Explain What is Strategic Management
• Explain What is a Strategy
• Describe the Strategy Statement and its Components
• Explain the Steps of Strategic Management Process
• Describe the Components of Strategic Management Process
• Differentiate between Strategy Formulation and Strategy Implementation
• Differentiate between Strategic, Administrative and Operational Decisions
• Describe the Qualities of a Strategic Leader
• Explain What is a Business Policy
• Describe the Structure of BCG Matrix
• Describe the Factors of SWOT Analysis
• Explain Porter’s Five Forces Model of Competition
• Explain What is Corporate Governance
• Explain What is Business Ethics
• Describe the Core Competency Theory of Strategy
Introduction
• Helium Inc. is a leading

manufacturer of electrical safety
equipments such as Miniature
Circuit Breakers (MCBs), Molded
Case Circuit Breaker (MCCBs) etc.
for the past six decades.
• It has carved a niche for itself in

this area and captures the largest
market share in its industry and
segment.

Introduction
• However, now Helium wants to

venture into the mobile and
Smartphone market.
• It has decided to launch a range

of mobiles and Smartphone that
will cater to the various segments
of the society.

Introduction
• What do you think Helium should

do to become successful in its
venture?
• Yes, a careful strategy planning

will help Helium recognize its
position in the market, its
competitors, and challenges etc.
to help it become successful in its
new venture.

Introduction
• Hence, strategic management is a

bundle of decisions and plans
which an organization takes to
become successful and improve
their overall performance.
• To make an organization
successful the management
should have a thorough
knowledge and analysis of the
general and competitive
environment of the organization.
• Let us learn about strategic

management in detail.
Objective
What is Strategic Management?
Strategic Management can be defined as a bundle of decisions and acts

which a manager undertakes and which decides the result of the firm’s
performance.
Strategic Management is all about identification and description of the
strategies that managers can undertake so as to achieve better performance
and a competitive advantage for their organization. An organization is said to
have competitive advantage if its profitability is higher than the average
profitability for all companies in its industry.

The manager must have a
thorough knowledge and
analysis of the general and
competitive organizational
environment so as to take They should conduct a
right decisions. SWOT Analysis which is an
analysis of the Strengths,
Weaknesses, Opportunities,
Managers should use the and Threats of an
results of the SWOT Analysis organization.
to make best possible
utilization of the
organizational strengths,
minimize the organizational
weaknesses, make use of Strategic management is
arising opportunities from the nothing but planning for
business environment and both predictable as well as
shouldn’t ignore the threats. unfeasible contingencies.
Strategic Management is a way
in which strategists set the
objectives and proceed about
attaining them.
Strategic management is
a continuous process that
It is applicable to both small as
evaluates and controls the
well as large organizations as
business and the
even the smallest organization
industries in which an
faces competition and by
organization is involved.
formulating and implementing
appropriate strategies; they
can attain sustainable
competitive advantage.
Hence, it is important to re-evaluate
strategies on a regular basis to
determine how they had been
implemented and whether they were
successful or do the strategies need
replacement.

Why Strategic Management?
Strategic Management is important to the success of an organization as:
It helps to manage
It helps us to identify employees in a manner
the direction in which which maximizes the ability
an organization is of achieving business
moving. objectives.
It deals with making Strategic Management gives a It helps the employees

and implementing broader perspective to the become more trustworthy,
decisions about employees of an organization and more committed and more
future direction of an they can better understand how satisfied as they can co-relate
organization. their job fits into the entire themselves very well with
organizational plan and how it is co- each organizational task.
related to other organizational
members.
Why Strategic Management?
Strategic Management is important to the success of an organization as:
Strategic management It helps to incorporate various

helps to keep a functional areas of the organization
continuous eye on the completely, as well as, to ensure
goals and objectives of these functional areas harmonize and
the organization. get together well.
It helps the managers Strategic management helps the employees It helps an

and employees to do to understand the reaction of environmental organization to
appropriate things in changes on the organization and the probable evaluate its
an appropriate response of the organization with the help of competitors and set
manner and make strategic management. Thus the employees goals and strategies
them both effective can judge the impact of such changes on their to compete with all
as well as efficient. own job and can effectively face the changes. existing and potential
competitors.
Objective
What is a Strategy?
The word “strategy” is derived from the Greek word
“stratçgos”; stratus (meaning army) and “ago”
(meaning leading/moving).
Strategy is an action that managers undertake to attain

one or more of the organization’s goals. Strategy can
also be defined as “A general direction set for the
company and its various components to achieve a
desired state in the future. Strategy results from the
detailed strategic planning process”.
Hence, a strategy is all about integrating organizational

activities and utilizing and allocating the scarce
resources within the organizational environment so as
to meet the present objectives. While planning a
strategy it is essential to consider that decisions are
not taken in a vacuum and that any act taken by a firm
is likely to be met by a reaction from those affected:
competitors, customers, employees or suppliers.

What is a Strategy?
• •
Strategy can also be defined Strategy is the blueprint of decisions in

as knowledge of the goals, an organization that shows its
the uncertainty of events and objectives and goals, reduces the key
the need to take into policies, plans for achieving these
consideration the likely or goals and defines the business the
actual behavior of others. company is to carry on, the type of
economic and human organization it
wants to be, and the contribution it
plans to make to its shareholders,
customers and society at large.
Features of a Strategy
The following are the features of a strategy:
Strategy is Significant because it is not possible to foresee the future.

Without a perfect foresight, the firms must be ready to deal with the
uncertain events which constitute the business environment.
The objective of a strategy is to maximize an organization’s

strengths and to minimize the strengths of the competitors.
Strategy is created to take into account the probable

behavior of customers and competitors.
Strategies dealing with employees will predict the

employee behavior.
Features of a Strategy
The following are the features of a strategy:
Strategy deals with long term developments rather than routine operations,
i.e. it deals with probability of innovations or new products, new methods of
productions, or new markets to be developed in future.
Strategy defines the overall mission, vision and direction of an

organization.
Strategy bridges the gap between “where we are” and

Roll your mouse over “where we want to be”.
the “Tip!” icon, to
learn more.
Strategy is a well defined roadmap of an

organization.
Tip!
While creating strategies that work for your
organization, you should keep in mind that
‘best practice doesn’t equal best strategy’. This
is because although blindly copying someone
else’s best practices may initially improve your
company’s operational efficiencies, it will
eventually have harmful and detrimental
financial and behavioral effects. This happens
because once you start following a leader,
your products and services will become more
homogenized with the leader’s products and
services. Moreover, on the behavioral front,
asking your employees to copy what another
organization has already done can be
demoralizing and lead to a suffocating the
intelligence and talent of your most strategic
resource: your people.

Objective
Strategy Statement and its Components
The ‘Strategy Statement’ of a firm sets the firm’s long-term strategic direction
and broad policy directions. It gives the firm a clear sense of direction and a
blueprint for the firm’s activities for the upcoming years. The main constituents
of a strategic statement are as follows:
Strategic Intent
Mission
Statement
Vision
Let us look at each in detail.
Strategic Intent
Strategic Intent
An organization’s strategic intent is the purpose that it exists and why it will
continue to exist, providing it maintains a competitive advantage. Strategic intent
gives a picture about what an organization must get into immediately in order to
achieve the company’s vision. It motivates the people. It clarifies the sight of the
vision of the company. Strategic intent helps management to emphasize and
concentrate on the priorities. Strategic intent is nothing but the influencing of an
organization’s resource potential and core competencies to achieve what at first
may seem to be unachievable goals in the competitive environment. A well
expressed strategic intent should guide/steer the setting of goals and objectives
that require all of the organization’s competencies be controlled to the maximum
value.

Strategic Intent
Strategic Intent
An organization’s strategic intent is the purpose that it exists and why it will
continue to exist, providing it maintains a competitive advantage. Strategic intent
gives a picture about what an organization must get into immediately in order to
achieve the company’s vision. It motivates the people. It clarifies the sight of the
vision of the company. Strategic intent helps management to emphasize and
concentrate on the priorities. Strategic intent is nothing but the influencing of an
organization’s resource potential and core competencies to achieve what at first
may seem to be unachievable goals in the competitive environment. A well
expressed strategic intent should guide/steer the setting of goals and objectives
that require all of the organization’s competencies be controlled to the maximum
value.

Mission
Mission
Some features of a Mission are:
• Mission must be feasible and attainable. It should be possible to achieve it.
• Mission should be clear enough so that any action can be taken.
• It should be inspiring for the management, staff and society at large.
• It should be precise enough, that is, it should be neither too broad nor too
narrow.
• It should be unique and distinctive to leave an impact on everyone’s mind.
• It should be analytical, that is, it should analyze the key components of the
strategy.
• It should be credible, that is, all stakeholders should be able to believe it.
Mission Statement
Mission
Mission Statement is the statement of the role by which an organization

intends to serve its stakeholders. It describes why an organization is operating
and thus provides a framework within which strategies are formulated. It describes
what the organization does (i.e., present capabilities), who it serves (i.e.,
stakeholders) and what makes an organization unique (i.e., reason for existence).
A mission statement differentiates an organization from others by explaining its
broad scope of activities, its products and technologies it uses to achieve its goals
and objectives. It talks about an organization’s present (i.e., “about where we
are”). Mission statements always exist at top level of an organization, but may also
be made for various organizational levels. Chief executive plays a significant role in
formulation of mission statement.
Mission Statement
Mission
Mission Statement is the statement of the role by which an organization

intends to serve its stakeholders. It describes why an organization is operating
and thus provides a framework within which strategies are formulated. It describes
what the organization does (i.e., present capabilities), who it serves (i.e.,
stakeholders) and what makes an organization unique (i.e., reason for existence).
A mission statement differentiates an organization from others by explaining its
broad scope of activities, its products and technologies it uses to achieve its goals
and objectives. It talks about an organization’s present (i.e., “about where we
are”). Mission statements always exist at top level of an organization, but may also
be made for various organizational levels. Chief executive plays a significant role in
formulation of mission statement.
Vision Statement
Mission
A vision statement identifies where the organization wants or intends to

be in future or where it should be to best meet the needs of the stakeholders.
It describes dreams and aspirations for future. It gives us a reminder about what
we attempt to develop. A vision statement is for the organization and its members,
unlike the mission statement which is for the customers/clients. It contributes in
effective decision making as well as effective business planning. It incorporates a
shared understanding about the nature and aim of the organization and utilizes
this understanding to direct and guide the organization towards a better purpose.
It describes how the organizational future would appear to be on achieving the
mission. In order to realize the vision, it must be deeply instilled in the
organization, being owned and shared by everyone involved in the organization.
Vision Statement
Mission
A vision statement identifies where the organization wants or intends

to be in future or where it should be to best meet the needs of the stakeholders.
It describes dreams and aspirations for future. It gives us a reminder about what
we attempt to develop. A vision statement is for the organization and its members,
unlike the mission statement which is for the customers/clients. It contributes in
effective decision making as well as effective business planning. It incorporates a
shared understanding about the nature and aim of the organization and utilizes
this understanding to direct and guide the organization towards a better purpose.
It describes how the organizational future would appear to be on achieving the
mission. In order to realize the vision, it must be deeply instilled in the
organization, being owned and shared by everyone involved in the organization.
Goals and Objectives
Mission
Goals:
A goal is a desired future state or objective that an organization tries to achieve.
Goals specify in particular what must be done if an organization is to attain its
mission or vision. Goals make mission more prominent and concrete. They co-
ordinate and integrate various functional and departmental areas in an
organization.
Objectives:
Objectives are defined as goals that organization wants to achieve over a period of
time. These are the foundation of planning. Policies are developed in an
organization so as to achieve these objectives. Formulation of objectives is the
task of top level management.
Mission
Goals:
organization.
Objectives:
Mission
Goals:
organization.
Objectives:
MCQ
Q. Which of the following states

‘where the organization wants or
intends to be in future’?
Click on the
radio button
to select the
correct
answer!
Real Life Example
Let us understand
through a few real life
examples, the vision &
mission of a few
companies.

Real Life Example
Vision
Vision:
“To be led by a globally diverse workforce
that consistently delivers outstanding
business results, understands the various
cultural demands of a global marketplace,
is passionate about technology and the
promise it holds to tap human potential,
and thrives in a corporate culture where
inclusive behaviors are valued.”

Real Life Example
Vision Mission
Mission:
“Help people and business
throughout the world to realize their
full potential.”

Real Life Example
Vision
Vision:
"Toyota’s Vision is to be the most
respected and successful enterprise,
delighting customers with a wide range of
products and solutions in the automobile
industry with the best people and the best
technology".

Real Life Example
Vision Mission
Mission:
Mission of Toyota is to provide safe &
sound journey. Toyota is developing
various new technologies from the
perspective of energy saving and
diversifying energy sources.
Environment has been first and most
important issue in priorities of Toyota
and working toward creating a
prosperous society and clean world.

Real Life Example
Vision
Vision:
"GM’s vision is to be the world leader in
transportation products and related
services. We will earn our customers’
enthusiasm through continuous
improvement driven by the integrity,
teamwork, and innovation of GM people."

Real Life Example
Vision Mission
Mission:
"G.M. is a multinational corporation
engaged in socially responsible
operations worldwide. It is dedicated
to provide products and services of
such quality that our customers will
receive superior value while our
employees and business partners will
share in our success and our stock-
holders will receive a sustained
superior return on their investment.”

Real Life Example
Vision
Vision:
“To become the world's leading consumer
company for automotive products and
services.”

Real Life Example
Vision Mission
Mission:
“We are a global family with a proud
heritage passionately committed to
providing personal mobility for
people around the world.”

Real Life Example
Vision
Vision:
“It’s the way we do business. It's the way
we interact with the community. It's the
way we interpret the world around us--
our customers need, the future of
technology, and the global business
climate. Whatever changes the future may
bring our vision -- Dell Vision -- will be our
guiding force.”

Real Life Example
Vision Mission
Mission:
"To be the most successful computer
company in the world at delivering
the best customer experience in
markets we serve.”

Real Life Example
Vision
Vision:
Our vision serves as the framework for our
Roadmap and guides every aspect of our
business by describing what we need to
accomplish in order to continue achieving
sustainable, quality growth.

Real Life Example
Vision Mission
Mission:
Our Roadmap starts with our mission,
which is enduring. It declares our
purpose as a company and serves as
the standard against which we weigh
our actions and decisions.
To refresh the world...
To inspire moments of optimism and
happiness...
To create value and make a
difference.
Real Life Example
Vision
Vision:
“The AT&T global network was born of the ingenuity
of AT&T Labs networking specialists who made
disparate systems work together. Being the world's
fastest and most reliable global network, our
network is the standard against which all others are
measured. To maintain our leadership in this arena,
we focus on the future and aggressively pursue
innovations. Our vision is to design and create in this
decade the new global network, processes, and
service platforms that maximize automation,
allowing for a reallocation of human resources to
more complex and productive work.”
Real Life Example
Vision Mission
Mission:
“Our mission is to exploit technical
innovations for the benefit of AT&T
and its customers by implementing
next-generation technologies and
network advancements in AT&T's
services and operations.”

Real Life Example
Vision
Vision:
“To create exciting new digital
entertainment experiences for consumers
by bringing together cutting-edge
products with latest generation content
and services.”

Real Life Example
Vision Mission
Mission:
“Sony is committed to developing a
wide range of innovative products and
multimedia services that challenge the
way consumers’ access and enjoy
digital entertainment. By ensuring
synergy between businesses within the
organization, Sony is constantly striving
to create exciting new worlds of
entertainment that can be experienced
on a variety of different products.”

MCQ
Q. Which of the following term means

‘A desired future state that the
organization attempts to realize’?
Click on the
radio button
to select the
correct
answer!
What is Strategic Management Process?
Strategic Management Process

means defining the organization’s
strategy. It is also defined as the
process by which managers make a
choice of a set of strategies for the
organization that will enable it to
achieve better performance.
Strategic management is a
continuous process that appraises
the business and industries in which
the organization is involved;
appraises its competitors; and fixes
goals to compete with the present
and future competitors and then
reassesses each strategy.

Objective
Steps of Strategic Management Process
Strategic management process has the following four steps:
Environmental Scanning
Strategy Formulation
Strategy Implementation
Strategy Evaluation
Let us look at each element.

Strategy Formulation Environmental Scanning:

Environmental scanning refers to a process of
collecting, scrutinizing and providing
Strategy Implementation information for strategic purposes. It helps in
analyzing the internal and external factors
influencing an organization. After executing
Strategy Evaluation
the environmental analysis process,
management should evaluate it on a
continuous basis and strive to improve it.

Strategy Formulation Strategy Formulation:

Strategy formulation is the process of
deciding best course of action for
Strategy Implementation accomplishing organizational objectives and
hence achieving organizational purpose. After
conducting environment scanning, managers
Strategy Evaluation
should formulate corporate, business and
functional strategies.

Strategy Formulation Strategy Implementation:

Strategy implementation implies making the
Strategy Implementation strategy work as intended or putting the
organization’s chosen strategy into action.
Strategy implementation includes designing
Strategy Evaluation the organization’s structure, distributing
resources, developing decision making
process and managing human resources.

Strategy Evaluation:
Strategy evaluation is the final step of
Strategy Formulation strategy management process. The key
strategy evaluation activities are: appraising
internal and external factors that are the root
Strategy Implementation
of present strategies, measuring
performance, and taking remedial /
Strategy corrective actions. Evaluation makes sure that
Strategy Evaluation
Evaluation
the organizational strategy as well as its
implementation meets the organizational
objectives.

Objective
Differences between Strategic, Administrative & Operational
Decisions
The differences between Strategic, Administrative and Operational decisions can be
summarized as follows:
Strategic Decisions Administrative Decisions Operational Decisions
Strategic decisions are long- Administrative decisions are Operational decisions are not
term decisions. taken daily. frequently taken.
These are considered where These are short-term based These are medium-period
the future planning is decisions. based decisions
concerned.
Strategic decisions are taken in These are taken according to These are taken in accordance
accordance with strategic and operational with strategic and
organizational mission and decisions. administrative decision.
vision.
These are related to overall These are related to working These are related to
counter planning of all of employees in an production.
organization. organization
These deal with organizational These are in welfare of These are related to
growth. employees working in an production and factory
organization. growth.
Objective
Qualities of a Strategic Leader
A few main qualities of effective strategic leaders are as follows:
12
• Loyalty - Powerful and effective leaders demonstrate their loyalty to
their vision by their words and actions.
• Have wider perspective/outlook - Strategic leaders just don’t

have skills in their narrow specialty but they have a little
3
knowledge about a lot of things.
• Motivation - Strategic leaders must have a zeal for work that goes
beyond money and power and also they should have an inclination to
4
achieve goals with energy and determination.
• Keeping themselves updated - Efficient and effective leaders
keep themselves updated about what is happening within their
organization. They use various formal and informal sources of
information in the organization.

56
• Readiness to delegate and authorize - Effective leaders are proficient at
delegation. They are aware of the fact that delegation will avoid overloading
of responsibilities. They also recognize the fact that authorizing the
subordinates to make decisions will motivate them.
• Self-awareness - Strategic leaders must have the potential to

understand their own moods and emotions, as well as their impact
7
on others.
• Self-control - Strategic leaders must have the potential to control
8
distracting/disturbing moods and desires, i.e., they must think before acting.
• Articulacy - Strong leaders are articulate enough to communicate

the vision (vision of where the organization should head) to the
organizational members in terms that boost those members.

9
• Judicious use of power - Strategic leaders makes a very wise use of their
power. They must play the power game skilfully and try to develop consent
10
for their ideas rather than forcing their ideas upon others.
• Social skills - Strategic leaders must be friendly and social.
11 • Compassion - Strategic leaders must understand the views and feelings

of their subordinates and make decisions after considering them.
12 • Constancy/ Reliability - Strategic leaders constantly convey their

vision until it becomes a component of organizational culture.


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DISCLAIMER

By Downloading these products I agree to the Copyright & Liability below:

© ManagementStudyGuide.com. All rights reserved.

• Helium Inc. is a leading

• It has carved a niche for itself in

© ManagementStudyGuide.com. All rights reserved.

• However, now Helium wants to

• It has decided to launch a range

© ManagementStudyGuide.com. All rights reserved.

• What do you think Helium should

• Yes, a careful strategy planning

© ManagementStudyGuide.com. All rights reserved.

• Hence, strategic management is a

• Let us learn about strategic

Strategic Management can be defined as a bundle of decisions and acts

© ManagementStudyGuide.com. All rights reserved.

© ManagementStudyGuide.com. All rights reserved.

It deals with making Strategic Management gives a It helps the employees

Strategic management It helps to incorporate various

It helps the managers Strategic management helps the employees It helps an

Strategy is an action that managers undertake to attain

Hence, a strategy is all about integrating organizational

© ManagementStudyGuide.com. All rights reserved.

Strategy can also be defined Strategy is the blueprint of decisions in

Strategy is Significant because it is not possible to foresee the future.

The objective of a strategy is to maximize an organization’s

Strategy is created to take into account the probable

Strategies dealing with employees will predict the

Strategy defines the overall mission, vision and direction of an

Strategy bridges the gap between “where we are” and

Strategy is a well defined roadmap of an

© ManagementStudyGuide.com. All rights reserved.

© ManagementStudyGuide.com. All rights reserved.

© ManagementStudyGuide.com. All rights reserved.

Mission Statement is the statement of the role by which an organization

Mission Statement is the statement of the role by which an organization

A vision statement identifies where the organization wants or intends to

A vision statement identifies where the organization wants or intends

Q. Which of the following states

© ManagementStudyGuide.com. All rights reserved.

© ManagementStudyGuide.com. All rights reserved.

© ManagementStudyGuide.com. All rights reserved.

© ManagementStudyGuide.com. All rights reserved.

© ManagementStudyGuide.com. All rights reserved.

© ManagementStudyGuide.com. All rights reserved.

© ManagementStudyGuide.com. All rights reserved.

© ManagementStudyGuide.com. All rights reserved.

© ManagementStudyGuide.com. All rights reserved.

© ManagementStudyGuide.com. All rights reserved.

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Q. Which of the following term means

Strategic Management Process

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Let us look at each element.

Strategy Formulation Environmental Scanning:

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Strategy Formulation Strategy Formulation:

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Strategy Formulation Strategy Implementation:

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